Best bare trust accounts for cash

anandp

My son's grandparents want to put some money aside for him with I'm getting control at 18.

From previous posts, it looks like bare trusts are the way to go. Does anyone know the best cash accounts to hold as bare trusts that are available at the moment?

xylophone

With a bare trust, he would get control at 18 (16 in Scotland).
http://bank.virginmoney.com/savings/learn/childrens-accounts/ here is one example.

The account can be held in bare trust until the child is 18 (16 in Scotland).

Note that if outside Scotland, and it is desired to hold the account in bare trust after the age of 16, any R85 on the account will have to be rescinded and the parent will need to reclaim any overpaid tax on behalf of the child.

Reaper

Are you sure you want a cash account? While there are no guarantees over an 18 year period I would expect an investment to do much better than a savings account, particularly at the moment with savings rates so poor and inflation rising.

To give an example I arranged a Bare Trust for my son for money his grand parents wanted to give with Baillie Gifford. They have a range of funds to choose from, I put most of it in Scottish Mortgage which has grown well. It's only one of several good choices but here is a link if you want to read more:
http://www.bailliegifford.com/individual-investor/how-to-invest/investing-for-children.aspx

xylophone

If you go down the IT/OEIC route, be careful that you establish a bare trust not merely "designated" account - see here http://www.sit.co.uk/products/investing_for_children/features/how_to/ for an explanation.

See also http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/
And should the investment pay interest rather than dividends see http://www.hmrc.gov.uk/individuals/savings-income.htm

anandp

xylophone wrote: »

If you go down the IT/OEIC route, be careful that you establish a bare trust not merely "designated" account - see here http://www.sit.co.uk/products/investing_for_children/features/how_to/ for an explanation.

See also http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/
And should the investment pay interest rather than dividends see http://www.hmrc.gov.uk/individuals/savings-income.htm

Yes thanks - have been reading up and had this on my checklist already.

anandp

Reaper wrote: »

Are you sure you want a cash account? While there are no guarantees over an 18 year period I would expect an investment to do much better than a savings account, particularly at the moment with savings rates so poor and inflation rising.

To give an example I arranged a Bare Trust for my son for money his grand parents wanted to give with Baillie Gifford. They have a range of funds to choose from, I put most of it in Scottish Mortgage which has grown well. It's only one of several good choices but here is a link if you want to read more:
http://www.bailliegifford.com/individual-investor/how-to-invest/investing-for-children.aspx

I agree, cash is not at all my preferred option but try telling his grandparents that! Its a discussion I'm not winning at the moment, so keeping the cash option open.

Any other suggestions on best accounts for this?

Reaper

As I tend to avoid them I'm not up to date on child savings but you could start here:
http://www.moneysavingexpert.com/savings/child-savings-tax-free

P.S. As far as I know Bare Trusts etc do not really apply to savings accounts. They apply to investments because children are unable to hold investments directly. According to Candid Money:
http://www.candidmoney.com/askjustin/809/difference-between-designated-accounts-and-bare-trusts

xylophone

In theory you can open any account as bare trustee for a child that the financial institution allows to be held in this way.

For example, some years ago when I was trustee for a minor, I held building society fixed rate bonds in this way as well as an instant access account.
The rules concerning what happens to the R85 at 16 were the same then.

However, I think you will be hard put to find much better than the Virgin account on any account at the moment?
http://www.thisismoney.co.uk/money/saving/article-1583859/Best-savings-rates-General-savings--Internet-branch.html

xylophone

P.S. As far as I know Bare Trusts etc do not really apply to savings accounts. They apply to investments because children are unable to hold investments directly. According to Candid Money:

http://www.candidmoney.com/askjustin/809/difference-between-designated-accounts-and-bare-trusts

"Banks and building societies also use some form of simple trust like this when opening an account for children who are below the minimum age they're allowed to hold it in their own name."

xylophone

P.S. As far as I know Bare Trusts etc do not really apply to savings accounts.

http://www.plummer-parsons.co.uk/wealth-management/trusts-and-executorships/bare-trusts
"A bare trust can be something as simple as a bank or building society account in the settlor's name as trustee for the beneficiary and would not therefore incur any administration expenses".

It is important to document the source of the funds and establish that the capital and income belong to the child absolutely.
http://www.ach-shoosmiths.co.uk/legal_updates/details/?l=412

Vortigern

Would a Junior ISA be suitable? If child does not have a CTF, parents can open a JISA and grandparents can contribute. Child can't access till 18 so no need for bare trust. I'm no expert. DYOR
http://www.moneysavingexpert.com/savings/junior-isa